As Thacher Proffitt prepares to shut down, the “how did this happen” reports can begin. AmLaw Daily notes that while other firms had banner years in 2007, Thacher was already struggling:

Thacher entered 2008 already struggling financially. The firm had suffered a dismal 2007, with gross revenue growing only 1.6 percent to $194.5 million and profits per partner dropping 22.1 percent to $1.02 million. The year to come didn’t treat the firm much better, especially come September, when several bank clients either collapsed or went into hasty mergers.

As we noted many times in these pages, a merger with King & Spalding had been the best hope for TPW to remain in business:

For months, Thacher had tried and failed to convince King & Spalding to acquire the firm outright. Discussions with the Atlanta-based firm to instead hire a chunk of its lawyers had plodded along for weeks. A deal to hire about 75 lawyers was close, but still not final, two sources at the firms say. With time running out for the 150-year-old firm, Thacher’s lawyers began talking to others, including Sonnenschein.

At least Sonnenschein was able to step in a save a lot of jobs. But after the jump, things are still pretty somber over at TPW today.

A tipster reports on the depressing mood at TPW. People who will make it over to Sonnenschein in 2009 were informed face-to-face yesterday:

No other “official” email went out. Folks were called into group leaders’ offices to learn of their induction into the Sonnenschein fraternity. Those not so offered got the message either directly or through innuendo. One attorney was seen crying openly in the office.

Even more disturbingly, another tipster reports that Thacher is already doing the usual hedging when it comes to fulfilling all of their salary obligations:

TPW will wind down operations through February 2009. TPW personnel not offered a position with Sonnenschein will be paid “to the extent feasible” as per the terms of TPW’s governing secured credit agreement through 2/20/09.

Is anybody else starting to wonder if the WARN act needs to be strengthened? What is the point of promising people 60 days salary if nationalized banks can simply stop payments at their discretion?

It’ll be ironic if the government aided (but not controlled) banks step in and prevent Thacher from paying their employees. Thacher recently won the $500,000 contract to advise the Treasury Department on the TARP program:

Thacher put in its bid for the contract December 2, and won it Wednesday. The partners on the contract – McCarthy, Eric Klingenberg, and Jeffrey Murphy – are all joining Sonnenschein, though the firm has not yet spoken with the Treasury Department, Portnoy says.

We’ll see if banks try to get out of payments before 60-days are up.

Assuming that TPW is the last firm to dissolve in 2008, which will be the first firm to dissolve in 2009? We now live in a world where that is a fair question.

We’ve all heard how dysfunctional entry-level legal recruiting is: Inordinate expense, decisions made on the briefest of subjective impressions with opacity all around, and what do firms reap for all their efforts? Shocking attrition rates among junior associates. It’s time for a conference on what could work better, and this is it.

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When was the last time you took a second look at your student loans? If you’re like most borrowers, you probably try hard not to think about them. After all, dwelling on your debt isn’t going to make it go away any faster. Or is it?